Coles demerger supporting corporate philanthropy

When Wesfarmers recently announced the details of the proposed demerger of its Coles business, it was also quietly supporting a new direction in corporate philanthropy.

Within the scheme’s structure there is a simple yet innovative option to grow philanthropic funding in Australia.

Wesfarmers’ scheme offers an optional sale facility to eligible small shareholders to donate Coles shares proceeds to charity as a tax-deductible gift.

Wesfarmers has a long-standing relationship with ShareGift Australia, the specialist non-profit organisation that facilitates charitable funding through the donation of shares and related residuals.

ShareGift’s six-year interaction with Wesfarmers shareholders has already generated more than $250,000 from the sale of share parcels or dividend reinvestment plan residuals.

How the proposed deal works

If the proposed Coles demerger proceeds (which remains subject to shareholder and other regulatory approvals), an eligible shareholder will be entitled to one Coles share for every Wesfarmers share held.

Eligible shareholders with 160 Wesfarmers shares or less at the record date may elect to have the Coles shares to which they are entitled, sold on ASX by the sale agent and the proceeds remitted to them or donated to ShareGift under the sale facility, free of any brokerage costs or stamp duty.

(Eligible shareholders include current and former employees of Wesfarmers Group who individually hold or have a beneficial interest in Wesfarmers shares held via employee share plan trusts.)

ShareGift will use the aggregated proceeds to support eligible charities, following the completion of the demerger. Wesfarmers and Coles have nominated SecondBite and Redkite as recipients of the funding ShareGift receives under the sale facility.

Shareholders choosing to donate to ShareGift will also receive an individual tax receipt direct from ShareGift and will be updated on the community benefit arising from consolidated contributions.

How to participate

First, refer to the full details of the sale facility included in the scheme booklet . An eligible Wesfarmers shareholder can elect to participate in the sale facility by selecting ShareGift on their sale facility form (which accompanies the scheme booklet) or via the online sale facility available at www.colessalefacility.com.au

Sale facility forms need to be received by Wesfarmers’ share registry by 5pm on 20 November.

Wesfarmers’ option is the latest in a growing number of deductible giving opportunities for shareholders.

Collaboration with ShareGift has the potential to become an industry standard for ASX 200 companies. The support for ShareGift in the proposed Coles demerger provides a simple, replicable model for other corporate transactions to provide a benefit to Australian charities.

Through providing shareholders with the choice to generate community benefit, companies encourage shareholder giving that can make economic sense, particularly for small parcels that can otherwise be administratively burdensome for individual investors and companies.

ShareGift exists to grow philanthropy in Australia. The future financial return for the community could be immense.

About the author

Anna Draffin is CEO of ShareGift Australia, a registered charity with the Australian Charities and Not-for-profits Commission (ACNC).

The only service of its kind in the country, ShareGift has distributed more than $1.64 million to more than 470 charities from share-related gifted funds. ShareGift is endorsed by the ASX Group (ASX) and Australian Shareholders’ Association (ASA).

ShareGift Australia does not provide financial advice. Seek advice from a licensed financial adviser and/or tax adviser who is a registered agent.

This article appeared in the November 2018 ASX Investor Update
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This article appeared in the November 2018 ASX Investor Update email newsletter. To subscribe to this newsletter please register with MyASX.

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